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“If you’re a Republican with energy expertise, yeah, your stock is fairly high right now.”
Biden’s signature climate law, the Inflation Reduction Act, passed on a party line vote by the narrowest of margins — 50 Democratic votes in the Senate (with Vice President Kamala Harris breaking the tie) and 220 in the House of Representatives. With tense tax negotiations looming next year, it will now have to survive a 53-Republican Senate and a majority-Republican House. And that means that if they want to save the IRA from being gutted, the beneficiaries of its tax credits for the production of and investment in non-carbon-emitting fuels, advanced manufacturing, hydrogen, carbon capture, and the rest will have to learn to speak Republican.
The companies that benefit from the bill are “going to keep engaging policy makers on both sides of the aisle, but particularly now Republicans,” Jason Clark, the former chief strategy officer of the American Clean Power Association and head of energy policy consulting firm Power Brief, told me.
“There’s been a very thoughtful, very considerate effort to do just that — to make sure that they know how to engage with Republicans in a way that is authentic, that isn’t just lip service,” Clark said. The industry should avoid, “Oh, my goodness, we want to be buddies all of a sudden because you’re in power.”
One way to do that is by making sure you have Republicans making your case. The American Clean Power Association has former Trump administration and American Petroleum Institute staffers on its policy and federal affairs teams, for example.
“If you’re a Republican with energy expertise, yeah, your stock is fairly high right now,” Colin Hayes, a former senior staffer on the Senate Committee on Energy and Natural Resources under Alaska Republican Lisa Murkowski and founding partner of the bipartisan lobbying firm Lot Sixteen, which represents a number of green energy firms and trade groups, told me in an email. “We’ve been getting a lot of calls.”
But it’s not just hiring the right people — the industry also needs to be “learning to engage with members of Congress as constituents,” Emily Domenech, a former staffer for House Speakers Kevin McCarthy and Mike Johnson who is now a senior vice president at Boundary Stone, a firm founded by veterans of the Obama Department of Energy, told me.
“In the past, clean energy hasn’t focused on getting to know those representatives. When they’ve had ideas for bills or policies, they went to Democrats. They haven’t built a lot of personal relationships with members of Congress on the other side of the aisle,” Domenech said.
Her advice? “Go out there and build relationships and do the shoe leather lobbying engagement that every other company is doing.”
And what kind of arguments might would-be buddy-buddy clean energy companies make to those Republican lawmakers?
Along with some changes in vocabulary, their strategy will likely involve a combination of appeals to business and investment certainty, job creation in Republican districts, and emphasizing the regional benefits of certain incentives, like tax credits for wind energy and carbon capture in the Great Plains or manufacturing in the South.
That’s because the projects themselves have largely ended up in Republican-represented and -controlled areas, which tend to have the open space and business-friendly regulatory climate clean energy companies appreciate, even when they’re run by Democrats.
Lobbyist Scott Segal, who represents a number of energy companies and other firms affected by the Inflation Reduction Act in his capacity as a leader of the government relations team at Bracewell, told me in an email that “the value proposition for a balanced energy portfolio contains many elements already of great concern to Republican leaders.”
“Significant capital has already been deployed based on clean energy incentives,” he said. “To change these incentives in midstream would create business uncertainty — in effect, it would increase taxes on these projects. Outcomes like this run counter to long-standing Republican principles.”
The industry is already starting to get the hang of the lingo. Advanced Energy United, a clean energy trade group, was early congratulating Donald Trump on his election victory. “When we talk to Republican lawmakers,” the group’s managing director, Harrison Godfrey, told me, the message is, “let’s not fundamentally change course. Investment decisions take years. We build industries with certainty.”
As several lobbyists and strategists I spoke to pointed out, the Inflation Reduction Act did not invent clean energy tax credits, and this won’t be the first battle to preserve them. Tax incentives for non-carbon-emitting “alternative” energy have been a part of the policy landscape since the late 1970s. Wind energy and biofuels have won especially ardent support from some very powerful Republicans, namely those in the Corn Belt, and particularly Iowa Senator Chuck Grassley, who has for decades fought for extending the production tax credit for wind.
“These are credits and industries that didn’t spring up yesterday and have literally been in existence for decades,” Godfrey told me.
The best example of an alternative energy credit that embedded itself within the Republican Party policy playbook is one many environmentalists face with some degree of chagrin: biofuels, Domenech told me.
The Renewable Fuel Standard, established by the Energy Policy Act in 2005 amid concerns about energy security, has become a bonanza for states like Iowa, which grows much of the corn that is then processed into ethanol fuel according to standards set by the Environmental Protection Agency.
Lawmakers’ attachment to the program is so strong that it has at times run a fissure through the Republican Party. Though Trump’s first EPA administrator, Scott Pruitt, was one of the administration’s chief villains in the eyes of the environmental movement, he also became a punching bag for Republican lawmakers, including Grassley, who tangled with Pruitt in 2017 over blending targets for biofuels and the waivers given to refiners to avoid buying credits to comply with the program. (When Pruitt resigned in a cloud of scandal the following year, Grassley took a rhetorical victory lap.)
Capitol Hill has maintained biofuels’ first-among-equals status ever since. The industry’s sway with lawmakers of both parties in the Midwest is why Republicans are joining with Democrats to introduce bills to extend the 45Z tax credit for so-called clean fuels “at a time when a lot of other IRA credits could be on the chopping block,” Domenech said.
Similar alliances could form around other parts of the bill, especially those with well-defined regional impacts, Domenech said. Doug Burgum, Trump’s pick for Secretary of the Interior and the head of his newly-formed National Energy Council, has backed a massive carbon capture and pipeline project in his home state of North Dakota, which some analysts have said could get billions of dollars in tax credits, Geothermal development could also maintain the support of lawmakers in the Mountain West, where most of the country’s geothermal resource is located, while incoming Senate Environment and Public Works chair Shelly Moore Capito is one of the chamber’s biggest advocates for nuclear power.
“If you ask Republicans to be for or against the IRA as a whole, they’ll be against it,” Domenech told me, “But Republicans think about energy as a regional issue. So instead of forcing this one size fits all approach, IRA advocates would be smart to give people room to support only the policies that make the most sense for their state or region.”
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On FERC’s ‘disastrous misstep,’ the World Court’s climate ruling, and 127 SMRs
Current conditions: West African countries including Guinea-Bissau, Guinea-Conakry, Senegal and The Gambia are facing flash flooding from heavy rainfall • The southwestern corner of New Mexico is suffering “exceptional” drought, the highest possible level in the U.S. Drought Monitor. • Already roasting in excessive heat, Des Moines, Iowa, is bracing for thunderstorms.
The Department of Energy canceled a nearly $5 billion loan guarantee for the Grain Belt Express, a transmission project designed to move wind power from Kansas to the industrial upper Midwest. After more than a decade of development, the power line won bipartisan support and secured $4.9 billion in federal financing late last year to fund the first phase of the project, running from Ford County in Kansas to Callaway County in Missouri.
As Heatmap’s Matthew Zeitlin explained, the project eventually drew the ire of Missouri Senator Josh Hawley, who recently stepped up his attacks in the hopes that a more friendly administration could help scrap the project. The transmission line’s developer, Invenergy, told Heatmap in a statement that “a privately financed Grain Belt Express transmission superhighway will advance President Trump’s agenda of American energy and technology dominance.”
The microreactor startup Oklo inked a deal with Liberty Energy, the fracking giant where Secretary of Energy Chris Wright served as chief executive before entering government. Liberty was already an early investor in Oklo, and Wright served on the nuclear company’s board. But the new deal is a strategic partnership with a plan to deploy Liberty’s gas equipment alongside Oklo’s reactors, mirroring similar pairings that other small modular reactor developers have promoted.
Oklo is among 127 small modular reactor designs currently under development worldwide, according to a new tally from the Nuclear Energy Agency at the Organisation for Economic Co-operation and Development, the 38-member club of rich countries. Of those designs, 51 are in pre-licensing or licensing processes, and 85 are in active discussion between SMR developers and site owners. Just seven are either operating or under construction.
The Federal Energy Regulatory Commission approved fast-track interconnection processes proposed by the Midcontinent Independent System Operator and the Southwest Power Pool. The new processes will allow power plants to sidestep the standard reviews for a grid hookup. Gas-fired power plants are “likely to be the main beneficiary of the fast-track processes, with standalone batteries also potentially being included,” Utility Dive reported. The American Clean Power Association, the biggest renewable energy lobby, called the decision “a dangerous misstep.”
Southern California’s landmark rule to spur the electrification of certain boilers and water heaters survived a major court challenge. A federal court last week upheld the first-in-the-nation regulation that applies to light-industrial and commercial boilers, steam generators, process heaters, residential pool heaters and tankless water heaters. The ruling, which only applies to the 17 million people in large parts of Los Angeles and its surrounding suburbs, could “help reenergize efforts around the country to replace fossil-fuel-burning equipment with electric heat pumps and other clean technologies,” Canary Media’s Maria Gallucci wrote.
Heatmap’s Emily Pontecorvo reported earlier this week on an effort in Newton, Massachusetts to beat back new gas pipelines block by block. But overall, the fight for electrification has recently faced repeated setbacks. In 2023, a federal court struck down the northern California city of Berkeley’s pioneering ban on new gas hookups, which was replicated in cities across the country. Last year, gas utilities staged something of a coup at the quasi-governmental organization that writes the building codes used in nearly every state.
Children stand outside a church destroyed in a cyclone in Vanuatu.Mario Tama/Getty Images
In a historic decision on Wednesday morning, the International Court of Justice ruled that countries must act on climate change. While non-binding, the verdict from the United Nations’ high court was dubbed “the biggest climate case in history,” as it established the first international legal precedent of a nation state’s responsibility to curb planet-heating emissions.
The tiny South Pacific island republic of Vanuatu called the ruling a “milestone in the fight for climate justice” and vowed to “take the ICJ ruling back to the United Nations General Assembly, and pursue a resolution that will support implementation of this decision,” said Vanuatuan climate minister Ralph Regenvanu. He anticipated opposition from Washington. “Even as fossil fuel expansion continues under the U.S.’s influence, along with the loss of climate finance and technology transfer, and the lack of climate ambition following the U.S.’s withdrawal from the Paris Agreement,” he said, “major polluters — past and present — cannot continue to act with impunity and treat developing countries as sacrifice zones to further feed corporate greed.”
Researchers at Japan’s Shinshu University have demonstrated for the first time that a new eco-friendly plastic made from microbes safely decomposes in deep ocean conditions
“This research addresses one of the most critical limitations of current bioplastics—their lack of biodegradability in marine environments,” said Professor Seiichi Taguchi at the Shinshu’s Institute for Aqua Regeneration. “The study provides a pathway for safer alternatives to conventional plastics and supports the transition to a circular bioeconomy.”
NextEra CEO John Ketchum projected serenity during the company’s earnings call Wednesday.
The business of renewable energy development in the United States is the business of NextEra. The company’s renewable division is one of the country’s largest and most sophisticated, with almost 30 gigawatts in its project backlog — including 3.2 gigawatts added in the past three months.
NextEra’s financial results and outlook for the future can be a guide to how the sector is thinking — or wants people to think it’s thinking — about the state of the development landscape. Now especially, that landscape looks confusing and contradictory, with power demand increasing sharply alongside hostility to wind and solar development.
The way NextEra sees it, NextEra will come through fine. But many other — especially many other smaller — players may struggle.
“Bottom line, America needs more electricity, not less,” NextEra Chief Executive John Ketchum told analysts during the company’s earnings presentation Wednesday.
“America needs it now, not just in the future. We are firmly aligned with the administration’s goal to unleash American energy dominance. And to do so, we need all of the electrons we can get on the grid. There’s truly no time to wait.”
That alignment may be one way, however. From sunsetting tax credits to ordering enhanced reviews of wind and solar projects by federal regulators, the Trump administration has made it clear that it does not see wind and solar as part of its energy strategy.
The rhetoric coming from Washington hasn’t been particularly constructive, either, no matter how often renewable energy companies try to label their work as part and parcel of an “energy dominance” agenda. Just in the past few weeks, Trump has claimed that China has “very, very few” wind farms (in fact it has very, very many), and Secretary of Energy Chris Wright called wind and solar a “parasite on the grid.”
NextEra is not unaware of the tone and policy emanating from the administration. The company issued a new risk disclosure, first noticed by analysts at Jefferies, saying that its guidance on future performance assumes “no changes to governmental policies or incentives, including continued applicability of existing Internal Revenue Service tax credit safe harbor guidance,” i.e. that it can “commence construction” the way it always has, by following existing IRS guidance.
Although that would be awfully nice, it may not be the case for much longer. Soon after signing the One Big Beautiful Bill Act, President Trump issued an executive order calling for “new and revised” tax guidance “to ensure that policies concerning the ‘beginning of construction’ are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”
It doesn’t take a terribly close reading to intuit that Trump wants to narrow the window for renewables developers to claim tax credits even beyond what Congress has already done. According to conservative members of Congress who wanted the tax credits to phase out even sooner, the president was merely fulfilling a promise he’d made to win their vote.
Ketchum at least projected serenity about the safe harbor situation, telling analysts that the definition of construction has been understood “for well over a decade,” that it “is informed by longstanding Treasury Department guidance,” and that the OBBBA’s language “definition is consistent with the settled meeting.”
He also noted that NextEra had “made significant financial commitments over the last few years, including in the first half of 2025, to begin construction under these rules that were in effect at the time those commitments were made,” i.e. before the bill was signed.
“We believe that we’ve begun construction on a sufficient number of projects to cover our development expectations through 2029,” Ketchum continued, adding that the company has determined it will be eligible for tax credits based on “our belief as to what the statute provides based on our experience in this industry over the last couple of decades.”
If anything, Ketchum suggested, NextEra might be advantaged by the harsh deadlines for commencing construction (July 4, 2026) or being placed in service (the end of 2027) in the new law. “It comes down to who’s safe harbor, right?” Ketchum said. “We know we compete against a lot of really small developers who don’t have the balance sheet, the construction financing to do things around safe harbor.”
In this kind of environment, Ketchum said, size matters.
“If you’re in a market where you have folks drop out, right, because they didn’t plan ahead, they don’t have the ability to get construction financing, they don’t have the ability to safe harbor. It obviously creates bigger opportunities for us.”
NextEra could be left to pick up the pieces from smaller developers that don’t make it, Ketchum said. “If we do see some small developers kind of fall away, there’ll be more projects that could potentially hit the market and come up for sale.”
It sure looks that way, at least. Democrats should start coming up with a plan.
For the first six months of President Trump’s term, the big question was about what would happen to the Inflation Reduction Act. We now have something like an answer.
President Trump’s memorably named One Big Beautiful Bill Act repealed many of the IRA’s most important clean energy tax credits, including incentives for wind, solar, and electric vehicles. And while it’s still unclear whether the Trump administration will let developers actually use the tax credits that remain on the books — especially the now-denuded credits for wind and solar — fewer “unknown unknowns” remain about what might come next.
So I’ve been trying to figure out where climate and energy policy might go from here. And one story that I keep coming back to is the flashing red lights around what could become a serious electricity affordability crisis.
It’s now widely understood that electricity demand is rising in the United States for the first time in a generation. The Energy Information Administration projects that electricity use will grow 1.7% in the next few years, after increasing by just 0.1% per year from 2005 to 2020. That growth is projected to come from new data centers, new factories, the (now) slow(er) but (still) steady adoption of electric vehicles, and population growth.
What is less well understood is how poorly the United States is prepared to match this rise in electricity demand with an equivalent increase in supply. To some degree, American electricity prices are already rising: So far this year, utilities have received or requested permission to increase customers’ bills by $29 billion, according to a July report from PowerLines, a think tank and advocacy group. That’s a large number in its own right, and it’s more than twice as much as had been approved at this time last year.
But when you look across the power system, virtually every trend is setting us up for electricity price spikes:
On top of all this, of course, the Trump administration has made it much more uncertain which new solar, wind, and battery projects will be able to secure tax credits — and with them, secure bank financing.
None of these trends alone would guarantee price increases or electricity supply constraints. But taken together, they reveal an electricity system that is coming under a variety of strains.
In the 2010s, cheap natural gas and technological advances in energy efficiency pacified much of the power system. We won’t have the same luxury this decade.
This is all going to be bad for the economy, bad for the climate, and bad for climate policy.
It’s a setback for the U.S. economy because, as President Trump somewhat alluded to in his second inaugural address, energy is a key input to virtually every other economic process, including manufacturing. But it’s especially bad for climate policy. The dominant plan to decarbonize much of the U.S. economy is to “electrify everything” — cars, appliances, home heating, and even many industrial processes. Americans will be far less eager to electrify everything if electricity is expensive.
If energy price hikes do arrive, Democrats are going to have a relatively straightforward time communicating about them in a narrow political sense. The story is just too simple: Democrats passed a law to encourage clean energy called the Inflation Reduction Act. Republicans repealed it. Energy prices inflated. QED.
That story alone might be too contrived, but the evidence we have suggests that OBBBA will raise energy bills. The REPEAT Project at Princeton University — led by Jesse Jenkins, my Shift Key podcast cohost — has a new report out projecting that the One Big Beautiful Bill Act will increase Americans’ electricity bills by $165 a year by the end of the decade. (If the law is allowed to stick around, and in the absence of intervening policies, it could raise bills by hundreds of dollars a year by the middle of next decade.)
OBBBA’s explosion of the federal deficit will make the situation worse: By expanding the deficit for such little public gain — that is, merely to memorialize earlier tax cuts, not even to make new ones — the Federal Reserve will have a more difficult time cutting interest rates in the future. That will in turn make it even more difficult for utilities and developers to finance new energy projects.
The political story will be so compelling here, I think, that Democrats will come under a lot of pressure to reinstate the wind and solar tax credits. And maybe they should do that — it could make sense as part of a larger energy or permitting deal. But stacking more solar and wind on the grid will not on its own lower people’s electricity bills.
Going into 2028, Democrats will need an actual plan to stabilize or cut electricity costs. They will need ideas about how (and whether) to speed up permitting, restructure wholesale power markets, and build new power plants in order to stabilize the power grid.
One thing that’s already clear is that in this inflationary environment, states like New York with publicly owned power authorities are able to intervene more forcefully in their own power markets than states that lack such capability. That’s because the state itself can act to build its own large-scale power plants. New York Governor Kathy Hochul recently directed the state’s power authority to build a new nuclear power plant upstate in order to grow the supply of zero-emissions electricity. Using their state own power authorities, governors in other states — or even the federal government, with an entity like the TVA— could take a similar step.
With all that said, I’ve been trying to come up with a scenario under which these price hikes will not materialize. In the late 2010s, for instance, America’s liquified natural gas exports surged essentially from zero, but domestic consumers didn’t see significant price hikes because drillers increased gas production to match the exports. Maybe that could happen again. And maybe utilities will — and this would, to be clear, be horrible for the climate — run their aging coal plants much more than they once anticipated doing.
Or maybe load growth won’t be as bad as we think. When Jesse and I spoke to Peter Freed, Meta’s former director of energy strategy, for Shift Key, he told us that the current data center boom is different from any previous buildout because of the presence of speculators. For the first time, he said, speculative data center developers are buying up prospective sites and requesting utility-scale hookups with the expectation that they will find a tenant for the data center in the future. In other words, the demand side of the electricity system is filled with an unusual amount of froth at the moment.
We also know that, more generally, the demand side of the power system is a mess. In the past few years, climate analysts have gotten used to talking about the power grid’s interconnection queue — that is, its supply side. But the demand-side queue — the process that lets new data centers, factories, and other new electricity users connect — is even more broken. In some jurisdictions, it’s little more than an Excel file that projects move up and down within as local politics requires.
We also know that one source of new demand — one planned factory or, more often, one data center — will sometimes apply to hook up to multiple states or utilities at the same time. It will get utilities to bid against each other, suss out the best construction sites and power rates, and only relatively late in the process make a final decision about where to build.
So if I were putting together a bear case for electricity demand, I would start here. Maybe aggressive data center speculators are bidding in multiple utilities, driving up projections across many states. That’s causing utilities to freak out about their supply, leading them to project the need for a lot of new investment — and, with it, a lot of electricity rate increases. But as data center speculators actually begin to build (or abandon) projects — and as some of the air inevitably comes out of the AI boom — some of this projected demand will start to evaporate. Perhaps the data centers that do get built will find ways to reduce their power usage, too.
Even this story won’t fully eliminate load growth on its own, though. Data centers make up the largest share of new electricity demand, but even then, they’re not the majority of it. The rest comes from, roughly, new factories, the slow electrification of the vehicle fleet, and new residential construction. But let’s say the One Big Beautiful Bill Act succeeds in hobbling the electric vehicle sector in the United States, many EV and battery factories get canceled, and fewer Americans buy EVs overall. Calculate in a mild recession, too, since all the AI and EV investment will be drying up.
In that world, most new sources of power demand really will be in abeyance. That’s how some of these power projections might not come true. But in most other scenarios, it’s time to hold on — and for blue-state leaders to think about how they can find cheap, zero-emissions electrons, as soon as possible.